Tuesday, July 27, 2010

Corporate Art

RB Murari, 2010, Courtesy: Monsoon Canvas

Corporate Art – History and time line

Corporates as art collectors existed right from the 15th century. The Medici bank is said to be the first recorded corporate art collector. The Medici bank commanded respect and good reputation in whole of Europe and were promoters of art and architecture. The Medicis were responsible for sponsoring most of the Florentine art during their reign. There were other banking houses during the Renaissance period that collected art and displayed them in their corporate offices.

In the 19th and the early part of the 20th century art was mainly used as part of a company’s marketing strategy to attract customers and promote the companies brand name. This was art used in a commercial sense.

Around 1940s it became prestigious to support art and culture and multi national corporations like IBM and others supported art shows and events to establish their importance in the corporate world. This trend caught on and by 1980s there was a boom in corporate art purchases. By the late 1980s, it had become such a popular phenomenon that the majority of the Fortune 100 and a large number of the Fortune 500 companies collected and displayed art in their workplaces.

Deutsche Bank, Microsoft, Progressive Insurance, UBS are some of corporate that maintain a world famous collection of art. It is also to be noted that these collections are primarily focused towards contemporary art. After the Monarchy, the Church and the Nobility, corporates have become the new patrons of art.
With well over 1500 corporate collections around the world, described in the International Directory, it is a very important phenomenon in the art market. The corporate art buyers have over the years become a lot wiser and more knowledgeable about art.

Why do corporates invest in art?

There are several reasons for corporations to invest in art. Although pure financial investment is one of the reasons, it does not fall into the primary motive of investing in art. Corporations are more interested in enhancing their corporate image by developing and maintaining art collections, as part of Corporate Social Responsibility programs. The Corporates being the new patrons of art are shouldering the responsibility in promoting art and culture within the society they belong to.

But the fundamental reason that encourages corporate art collecting is the fact that there has been several studies that indicate an increase in productivity and work satisfaction among the employees. A survey conducted, quite some time a go by BCA (Business Committee for Arts), with more than 800 employees working for 32 companies throughout the United States showed that art in the workplace helps businesses address some key HR challenges like: reducing stress, increasing creativity and productivity, enhancing morale, broadening employee appreciation of diversity and encouraging discussions, and expression of opinions. Art at workplace also helps in enhancing customer and community relations by promoting networking opportunities.

Corporations however are not overlooking the capital appreciation that art could bring them. They pay reputed art consulting companies to select, organize and maintain their collections. Since the selection of the artwork has been outsourced to professionals, it ensures investment of corporate money in high potential artists and artworks.

Earlier art was purchased without much planning but now art is chosen by, corporations with great care to match the organizations culture, brand and outlook. The works are closely examined for their capital appreciation potential too.

The Corporations have now become a very high determined of the contemporary art market due to their large purse strings and the number of works purchased.

Top Corporate Art Collections

There are approximately 1500 serious corporate art collectors. Here are some of the famous collections.

Progressive art collection – consists of 6500 artworks

Deutsche Bank art collections – 56,000+ works of art

UBS art collections – consists of 35,000 works of art

Microsoft art collection – 5000 works of art 

Sources used in the article:

List of Corporate Art Collections

The corporate art brief -

Friday, June 25, 2010

Mordern Indian Art Market Returns to Peak Levels

Butterfly Woman by Asma Menon, courtesy Monsoon Canvas

So far, 2010 has been a very good year for the Indian art market.Both volumes and average auction prices in the Modern Indian art market are now back to levels seen at the peak of the Indian art market in June 2008 – a remarkable recovery after volumes in the Modern Indian art market dropped 63% between September 2008 and March 2009, and prices fell 46% in the same period.

The sharp recovery in the Modern market is also starting to rub off on the Contemporary Indian art market, which has remained subdued after market confidence evaporated during the downturn. The Contemporary Indian art market dropped 93% in volume and auction prices plummeted 85% between autumn 2008 and spring 2009. However since then, average prices are only 35% below its peak, and volumes have more than doubled since June last year.

Arttatic, Indian art report, June 2005

Wednesday, June 2, 2010

Seminal Masterpiece by Syed Haider Raza Leads Christie's Sale

Syed Haider Raza (b.1922), "Saurashtra", 1983. Estimate: £1.3 million-1.8 million. Photo: Christie's Images Ltd., 2010.

LONDON.- On 10 June, the day after Christie’s unprecedented sale of art works selected from the Estate of Francis Newton Souza, the momentum continues with Christie’s South Asian Modern and Contemporary Art auction. The renewed confidence in the market for this category was signalled by the success of the New York sale in March, which realised $8.9 million and was 95% sold by value, with many new private collectors bidding. The international appeal of this field continues to grow, with participation from buyers in Singapore, Hong Kong, U.A.E, the United States and Europe. The London sale is led by Saurashtra, 1983, a seminal masterpiece by Syed Haider Raza (b.1922) (estimate: £1.3 million-1.8 million), which is the most valuable modern Indian work of art ever offered at auction. This auction presents an exhilarating array of important works from private collections, with excellent provenance by the leading Indian and Pakistani artists of 20th and 21st century. Featuring the celebrated masters of the Progressive Artists Group, through to the biggest names in contemporary art, attractive estimates cross the spectrum of artists, styles and media with estimates ranging from £1,000 to £1.8 million. The sale is expected to realise in excess of £4 million. Please see the separate press release for details on the sale of art works selected from the Estate of Francis Newton Souza.

Yamini Mehta, Christie’s Senior Specialist, Director, South Asian Modern + Contemporary Art, London: “The global art market is receptive to the best. As international collectors converge in London this June prior to heading to Art Basel, where an increased number of South Asian Art will be on view this year, we are thrilled to be offering iconic works by the masters as well as important contemporary works, including examples by Pakistani artists. It is important that Christie’s, as well as galleries, art fairs and institutions, continue - as they do - to broaden concepts of what constitutes Sub-Continental art.”


The top lot of the sale is the most valuable modern Indian art work ever to be offered at auction: Syed Haider Raza’s Saurashtra, 1983, (estimate: £1.3 million-1.8 million), from a Private French Collector who acquired it directly from the artist, illustrated above. This large work (78¾ x 78¾ in. / 200 x 200 cm.), by one of India's leading modern masters, belongs to a key period in Raza's career when his artistic path brought him full circle and he began to integrate vital elements of his Indian childhood and cultural heritage into his paintings. Combining powerful and expressive brushstrokes with a very rich palette, Saurashtra provides a transitional bridge into his structured geometric works which are characteristic of his most recent body of paintings. Exploring landscape and nature; gesture and expression; geometry and spiritualism, this painting is one of Raza's most ambitious works to date. This is a remarkable opportunity for collectors and institutions around the world.

Further Modern Highlights:

• Untitled (Arjuna and Krishna), circa 1980s, by Maqbool Fida Husain (b.1915) (estimate: £500,000-700,000) which portrays the heroes of the Hindu epic, the Mahabharata. The strong influence of classical Indian painting and sculptural traditions upon Husain is evident in this work, which exemplifies the characteristic energy of Husain’s canvases.

• Falling Bird, 1999 is a tour de force by Tyeb Mehta (1925 -2009), one of India's greatest Modernist masters (estimate: £400,000-600,000). Having executed only a relatively small body of work, it is very rare that such an important example comes to auction. With mythological thematic roots, this work skilfully combines concept, line, colour and composition.

• Untitled (Gulammohammed Sheikh with Tom Hancock), circa 1970s by Bhupen Khakhar (1934-2004) (estimate: £100,000-150,000). Gulammohammed Sheikh was Khakhar’s lifelong friend; Tom Hancock (1930-2006), a British architect who taught at Baroda during the seventies and designed the Battersea Peace Pagoda in London, also became part of the artist’s circle. Drawing inspiration from the West and India, this painting stylistically alludes to early Italian painting and Bengali pata painting from Kalighat, but also imbues the spirit of Henri Rousseau and David Hockney.

Contemporary Works:

The strong array of contemporary art featured provides collectors with an opportunity to acquire significant works by some of the best known South Asian practitioners today. Subodh Gupta is one of India's leading contemporary artists, whose powerful vocabulary is firmly rooted in the vernacular of everyday India. Chimta, 2003, (estimate: £200,000-300,000), transforms hundreds of stainless steel tongs or 'chimta' - a common Indian kitchen staple used for handling chapatti and naan bread - into a metallic explosion of wonder. Offered from a private European collection, this semi-globed constellation continues the legacy of Duchamp’s ready-mades whilst simultaneously revealing the sensuous splendour of familiar objects, as if they are precious or luxurious commodities. Gupta stirs questions about the dramatic changes and shifts that accompany India's strengthening economy and its effect on the country's deeply spiritual and ancient culture.

Further Contemporary Highlights:

• Untitled by Ravinder Reddy (b.1956) (estimate: £90,000-120,000), who contemporises traditional Indian goddesses, whilst referencing Jeff Koons and playing with the American concept of "super-sizing." Through such transformations and re-appropriations of ancient Indian temple sculpture, the artist is possibly commenting on how India's religious and cultural histories are being diluted and Westernised by the surge of ‘progress.’

• Dis-location 3, 2007, by Rashid Rana (b. 1968) illustrated left (estimate: £60,000-80,000) who charts a new course with his ‘Dis-location’ series by using one location photographed over a duration of twenty four hours to create the large composite image of the same location. Disorienting the viewer’s sense of time and place, the 'pixels' of the work illustrate the frenetic nature of busy street life in contemporary Lahore, whilst the overall image possesses the charm of a historical photograph.

As printed in http://www.artdaily.org/, 2nd June 2010

Wednesday, May 12, 2010

Get ready to pay Rs 100 cr for a single work of art

S.G Vasudev, courtesy Monsoon Canvas

As confidence for Indian modern art returns, prices will rise in the same proportion as they did in the last decade.
What are we to make of the sale of just two artworks at auctions this year equalling the size of the entire Indian market? Pablo Picasso’s Nude, Green Leaves and Bust last week became the world’s highest-priced artwork when it was auctioned by Christie’s for Rs 478 crore, beating Alberto Giacometti’s sculpture Walking Man I that was auctioned earlier in the year by Sotheby’s for Rs 468 crore. That the Indian art market is terribly undervalued hardly needs reiterating. But when it fell from Rs 1,500 crore in 2008 to about Rs 800-900 crore currently, the signals it sent out were not just about the low value attached to Indian artists but, more importantly, about the shortage of good art in the market.

In part, this is because what we refer to as “modern art” has had a very short history in India, with even fewer artists working in that style. How many of Raja Ravi Varma’s co-painters can we name? Or, for that matter, who were Amrita Sher-Gil’s contemporaries? Because “studios” hired painters to paint in the style that was then fashionable, works by even talented artists were attributed to an ambiguous “Anonymous” identity. Almost no research has been undertaken to identify who these artists were.

Since the forties, we have seen more works by more artists, but as compared to Western countries, the numbers have been low (because there were fewer patrons, perhaps — the “modern school did not appeal to everyone in India nurtured on a tradition of more sentimental aesthetics), and recognition for them even lower. A number of artists who worked through the fifties, sixties and seventies would have remained for all purposes unknown, had not the heady pursuit of scarce artworks and a booming art market in the last decade led to their resurrection from a state of near-anonymity.

High disposable incomes, the opening of Indian markets and an appreciation of things Indian drove up the prices of Indian art on a combination of availability, quality and hype. Hysteria marked the new benchmarks that auctions now created. The first painting to cross the Rs 1 crore standard and each successive crore were excitedly reported and an increasing number of artists were welcomed to the “crore club”. For a while it appeared that art for art’s sake had been overtaken by art for investment’s sake.

How the art market would have continued if it hadn’t been reined in by recession is now in the domain of speculation. But this much we do recognise: that the art market had over-heated not because of the top prices paid to a few, rare quality artworks but because the vast and greedy contemporary market had been consumed by a lust for easy money. Unproven artists were demanding and getting unreasonable valuations, mediocre art was over-priced, and there seemed no precedents any more to valuations.

But a thumbs-up to its recovery comes from art market research firm Art Tactic’s report that shows confidence in the Indian modern art going up 28 per cent since October 2009. On its scale of one to 10, Indian modern art is now placed at 6.9, not just its highest ever posted by the London-based firm, but up from 4.9 just six months earlier.

The report is bound to bring speculators back into the Indian art market, lured by the prices and high confidence in, particularly, modern art — the gap between modern and contemporary art, according to the report, has widened to 51 per cent. But some common sense should help the collector in arriving at the “right” price. If we accept that for a country of India’s size, there were very few painters to begin with, and then accept the global average that only 10 per cent of an artist’s work can be considered of exceptional quality, then the amount of such art is very limited and getting scarcer as it ends up in the hands of intuitions, or collections, that are unlikely to re-sell.

And it is works of such quality that will do for prices in the new decade what they did in the last decade, something that investors with their short-term concerns would do well not to overlook. India’s highest prices for art were achieved in 2008, true, but this must be said: in the decade 2001 to 2010, the highest prices achieved moved from Rs 10 lakh to well above Rs 10 crore. In the coming decade, the same quality of artworks will see the price move from Rs 10 crore to — yes, hold your breath! — Rs 100 crore.

Even at that price, a Tyeb Mehta or F N Souza, an S H Raza or M F Husain will still be a fourth or fifth of Picasso’s current value, but we can save the catching up for the next decade that will follow.

These views are personal and do not reflect those of the organisation with which the writer is associated

Article by Kishore Singh as printed in Business Standard, May 12, 2010

Sunday, May 2, 2010

Practical advice from an art collector - on art as investment

Still life, R.B.Bhaskaran, courtesy Monsoon Canvas

As a long time collector, I have had the chance to mull over my art portfolio, which has been collected over the years. When I look at them, I see many from my earlier days that were purchased merely for capital appreciation and many that were purchased because they touched me in some way. In hindsight, I would say, the latter set of paintings still has the same effect on me unlike the ones I purchased purely for investment.

And what happened to capital appreciation, you ask? Well it has appreciated, but only notionally, I do not think I could monetize them for a decent profit…..

Art as a serious (organized) investment medium emerged only in the 2000s, promoted by Investment Banks looking for diversification of their portfolio. With a lot of new-money in the economy with the internet boom and the world becoming flatter, banks found an innovative and glamorous investment medium for their clientele.

But has it lived up to its expectations?

The performance of some of the recent funds like the ABN-Amro Fine Art fund and the Osian’s Fine Art fund (India) were not very encouraging. Unfortunately, they were unable to provide capital appreciation to the investors, on the contrary the investors actually lost a portion of their investment.

Investing in the works of modern and renaissance masters definitely pays off as those works are limited in numbers and there is no chance of further works being done. These works also command historic and academic value. One can also be sure of the real talent and value of the artwork due to the mass of literature detailing them. In other words an investor knows what he is getting. Unfortunately this is a luxury that is affordable by a few.

Whereas, in the case of contemporary art, which is more affordable, there is scope of increase in supply (as the artists are still active) and there is no antiquity value that it has. The artist and artwork has not been time tested (read, survived series of art critiques and analysis). One would need a lot of patience investing in one of them as it would be a long wait for a considerable appreciation, especially if the artist is very prolific. This effects the liquidity of contemporary art as a capital appreciation tool.

Either this or that, the best advice would be:

Buy an artwork that you love and that communicates to you in some way, as it is going to be hanging on your wall for a long time. Buy art for the love of it.

Art collector

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Saturday, February 13, 2010

Motivations to Invest in Art

March of Progress, Jitin Hazarika, courtesy Monsoon Canvas

Diversification: An investment in art can be an effective tool to reduce the risk exposure of a carefully planned investment portfolio. This would be an ideal measure to employ during a period of market volatility.

The prerequisite here, is top-quality art and a long-term view of 10 years or more. Research supports the ability of quality art to survive economic downturn, the value of the holding never going down to zero, compared to many other investments. Art prices have been consistently shown to recover more quickly after crashes than equities.

In addition, art market prices have been shown to have outperformed the S&P500 and more conservative investments in the long-term (Mei/Moses' extensive research of paintings sold at auction over a 50 year period compared to US stock market prices- note both asset classes were ex transaction costs).

Economic slowdown: During these periods investors begin to turn to alternative investments, such as art, when equities and property seem fully valued.

Capital appreciation: This benefit attracts those investors wishing to achieve long-term growth that beats inflation and has a good chance of outperforming the stock market. The factors fuelling this upward trend are an ever-increasing demand of art due to globalization, increasing need for corporate identity, rising incomes and more information lending to better art market transparency. This increasing demand is met by a falling supply of top quality art, as works cannot be produced at will.

Speculation: The best conditions for this aspect are when stock markets are booming and interest rates are low, when investors wealth and confidence is growing. Recently the ability to speculate has also been lubricated by the increasing transparency; availability of comprehensive research and information from the media and Internet, which is helping to define art as a new asset class.

However, caution should be exercised. The art market is illiquid compared to equities, having a lower turnover rate, thereby contributing to the opaque nature of art prices, which can be vulnerable in some sectors due to subjective pricing and faddish trends. Art works normally produce no income streams, they are unregulated and difficult to compare.

In addition, transaction costs, due to agents, often essential for securing the best deal, can be as much as 25% and may wipe out profits in the short term. One should also budget for negative income: storage and insurance. This can be recouped by renting out to museums, corporations and galleries, and having a long-term view.

Extended Boom Period: Art market prices have been shown to carry a beta greater than 1, art prices move up more than equities in boom times and drop lower in crashes (William Goetzmann Yale School of Management). Fortunately there is usually a time lag of between 9mnths and 2 years. For example Oct 87 Crash, Sotheby's and Christies achieved record prices in that year, the art world only crashed at the beginning of the 90's. This is good news for those wishing to engage in art investment with speculative motivations.

Taxation benefit: For those seeking capital gains rather than income. This is of best advantage in a corporate environment because art can be written-off over time as an expense.

Philanthropy: For those investors who want to contribute to, the development and safe-keeping of culture, stimulating growth of the local and world economy at large by investing in the Creative Economy, while also providing much needed support for working artists.

Emotional dividends: A work of art can providing a lifetime of visual pleasure to its owner. In a corporate setting, art well chosen work of art can improve employee wellbeing and productivity.

Social status, Corporate Identity and Brand Management: Through self differentiation, this function has served acquirers for thousands of years...

Remember: Non-speculative reasons for investment in art should be a priority, because most people who have made money have not made it by purchasing art as an investment. The key to a great investment is the combination of knowledge, focus, diversification and passion.

The article originally appeared in http://art2bank.com

Sunday, January 24, 2010

Indian art funds: Hedging the bet hasn't paid off

Some weeks ago, a financial daily finally came out with a strongly worded story that was fairly common knowledge within art circles: The great Indian art fund—and there are too many to list—as per available figures, has proved (as yet) to be a non-performer in-so-far as deliverables go: the promise of fantastic returns used by fund managers waved at the naïve and occasionally, hapless investor remains, till this day, just that. But, say trade experts, it’s not all as bleak as it sounds.

Placing the current situation within a larger, ‘markets’ perspective, financier and art collector, Nandan Maluste analyses the scenario thus: “An ideal investment market trades identical items, is liquid, transparent and well regulated so that only what is unfair is illegal, known to all, and infringements are punished rapidly.

Nevertheless, even investing in an ideal market cannot be risk free. In reality, no market meets this ideal. Imperfections are seen as opportunities by the shrewd and patient, but are obstacles to the naïve or hurried.”

Having advised an art fund, Maluste adds, “It’s obvious that no art market can match the above ideal, and the Indian art market does not, on any count. In spite of this, most art fund promoters (when they set out) promised liquidity and returns within a short time or even regularly. They also exaggerated their own expertise. People believed that the bull-run, just like the bull-run in the equity market, would persist longer than it did.”

In short, what we are witnessing is a cumulative fall-out of a collision between larger recessionary trends and the specific peculiarities of trading that exist within the Indian art market. A portion of the dismal picture, opine experts, is also mired in the irregularities of trade practice. As is known, this market is in the early stages of development. The absence of monitoring systems and a lack of clear checks and balances vis-à-vis financial due diligence, have all played a role in precipitating the situation.

Founder and chairman, Osian’s and chief advisor, Osian’s Art Fund, Neville Tuli, continues however to believe that there is no ‘Art Fund Crisis’ as such. He describes the current situation as “... only a low moment in the larger historical journey which cannot be short-circuited into success.”

He adds, “You have to see the present problem in the context of transforming the art object into a credible capital asset in a cash driven economy, without basic financial infrastructure, sufficient public awareness, regular institutional flow of authentic art financial information, and a host of other financial facilities (eg bill discounting, collateralisation of art fund items, underwriting framework) that are just not available.”

Mukesh Panika, director, Religare Arts Initiative opines: “One would not say that there is a crisis really, but the art funds floated in 2006-08, when the art market was booming, have found themselves facing difficult times due to the downturn in the global market which has had an impact on the Indian art market as well.

Another contributing factor is that this asset is not as liquid. The art fund which we are advising is in the nature of a Private Trust which operates for the benefit of the beneficiaries.” He holds that there is a chance of getting better returns in the coming years and the “same would earn reasonable returns by 2010-11.”

A senior art critic though is skeptical. Citing reasons of aesthetic judgment, he explains, “Not all fund managers are necessarily qualified to assess the aesthetics of every/all work. Selecting art for collections/funds is a specialised task. In fact it’s an unwritten rule that seasoned collectors are familiar with: every work of art by even established artists is not likely to appreciate. An assessment of works acquired for the purpose of appreciation within the collection of the many art funds may reveal that almost 30-40% is not likely to make the grade.” A well known art collector, who chooses not to be named adds, “In the case of some art funds it’s all a case of insider trading at its worst!”
Assessing the situation in more candid vein, Swapan Seth, managing partner, Henry S Clark, an art house, says: “We had it coming. It was greed on the part of fund houses that wished to over leverage their grandiose ambitions and make a pile of cash, and naiveté on the part of the investor, who had little knowledge of the intricacies of the art business, that made it all topple like a pack of cards in the wind.”

But to give the devil its due, certain funds are taking onus and quick steps to rectify the mess. Speaking for Osian’s, Tuli claims, “We have almost completed the redemption of 85% of the capital to all Unit Holders. Five out of the 11.72 income were paid 18 months ago. Thus for every 100 unit invested 15+6.72 needs to be repaid to close the Fund, which will be completed within February 2010.”

In months to come, the larger scenario is only expected to improve. Says Maluste, “With stocks, property, gold and other commodities all picking up, we should see better prices for Indian art in 2010 and 2011. But whether those will yield attractive returns for those who bought in 2006 or 2007, at peak market prices and bore the whiplash of the 2008-2009 slide remains to be seen.”

Seth adds, “While correction has taken place, much remains to be done. I see the punters losing steam, strangulated by the money they had invested and cannot get back. On the other hand for the serious investor/collector, I see light at the end of what will be a tenuous tunnel. At the end of three years, the wheat will be separated from the chaff. But about one thing I am sure. Art as a market will be chastened after having realised as Richard II did, that its “...rash, fierce blaze of riot cannot last.”

For the future, Seth touts a Buffet like perspective to investing. Laconically, he urges, “...when others are greedy be careful. When others are careful, be greedy. So if you have been careful buy more now since there is no better time. If you have been greedy, Oliver Twist like, wait in line for your gruel. To those seeking to invest, do it because you want to invest and not speedily divest. Invest because there is intrinsic value in art. Not prodigious returns, perhaps. If you view from an equity perspective and see it through the lens of short, mid-term and long term investment, you will see potential in it. If you view it from The Golden Goose perspective, then your goose is cooked and on your table already.”

Maluste’s advice to the already invested is, “Be patient. Imagine you have invested in Indian real estate. Modern and contemporary art still holds potential as an asset class provided one is not thinking short term. The rich throughout the world, including India, have always patronised art, with a variety of motives. Over the long run, they have done amazingly well. I think the market is heading for continued growth over the medium and long terms.

Not only are Indians becoming more affluent and appreciative of our art and artists, but foreigners are increasingly getting interested. Essentially, as has passed into the popular idiom since the 2002 Goldman Sachs report, the BRIC countries will be economically ascendant, in case of India at least till 2050. Financial and cultural attention will therefore focus upon us. This will make it economic to improve and educate the entire chain, from artist to collector.”

The last word, ironically enough, could come from Tuli, who holds that: “There are very few guidelines for leaders, and so we must absorb all lessons with equanimity.” Indeed the art fund ‘situation’ in India affords a useful primer for those who have singed their hairs, and for those aspiring to enter a market, nay a world, that holds the potential to yield several sweet returns, many of which cannot be measured in commercial terms.

(The writer is director of The Loft in Lower Parel, Mumbai)

Financial Times, 24 Jan, 2010